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Why does Tax Center/Tax Planner count Roth IRA reivested dividend as taxable income?

dennis.f.warren

It is the beginning of the 2020 tax year. My Tax Center is showing 2019 reinvested dividends from my Roth IRA(s) as estimated taxable income for 2020. Any ideas?

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Accepted answers

John_M

Per the others, making the account tax-deferred should keep these transactions from showing up in your tax report.

Sherlock

I suggest you open the Roth IRA account, press Ctrl + Shift + E, and ensure that Yes is chosen for Tax deferred.

All comments

John_M

Are you using the Windows or Mac version? Note that subscription is not a version.

What follows pertains to the Mac version, but it's probably very similar in Windows.

From the "Window" window choose "Categories." Under the Investments category are all the subcategories including "Dividend Income" and "Dividend Income Tax-Free." Make sure that you are using the latter category for your Roth IRA dividends. See attached screenshots.

If that isn't the problem, I don't have any other ideas. Hope this helps.

Screen Shot 2020-01-13 at 9.33.10 AM.png

Screen Shot 2020-01-13 at 9.33.20 AM.png

NotACPA

How are you recording those reinvested dividends? What Tax Attributes have you set for the Roth IRA? Is the Roth set as "Tax Deferred" on the Account Details screen?

dennis.f.warren

I am using Windows version. When I download transactions from my financial institution, quicken is assigning dividend categories, not me. Typically is _Div or _ReinvestDiv

John_M

Per the others, making the account tax-deferred should keep these transactions from showing up in your tax report.

Sherlock

I suggest you open the Roth IRA account, press Ctrl + Shift + E, and ensure that Yes is chosen for Tax deferred.

NotACPA

dennis.f.warren said:

I am using Windows version. When I download transactions from my financial institution, quicken is assigning dividend categories, not me. Typically is _Div or _ReinvestDiv

Do TOOLS, Category List. What does it show in the "Tax Line Item" field across from_DivInc?

Image: https://us.v-cdn.net/6031128/uploads/editor/a5/uicc9fqwk1qn.png

dennis.f.warren

> @John_M said:
> Per the others, making the account tax-deferred should keep these transactions from showing up in your tax report.

This is what I ended up doing as a workaround and it seemed to work. Thanks.

dennis.f.warren

> @NotACPA said:
> (Quote)
> Do TOOLS, Category List. What does it show in the "Tax Line Item" field across from_DivInc?(Image)

"Schedule B: Dividend income"

NotACPA

That's not a "workaround". It's how the account should have been setup in the 1st place.

Glad you got it worked out.

dennis.f.warren

Well, perhaps. A Roth IRA is not exactly 'Tax deferred.' When I set the account up with the wizard and specified Roth IRA, if it was supposed to be that way it should've been set that way. I did not change it.